National News

Sandwich Monday: The Primanti Bros. Pitts-burger

NPR News - Mon, 2014-10-20 11:41

For this week's Sandwich Monday, we try a sandwich from the famous Primanti Bros. of Pittsburgh.

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Judge Says 1,000 Potential Jurors May Be Screened For Boston Bombing Trial

NPR News - Mon, 2014-10-20 11:35

Boston Marathon bombing suspect Dzhokhar Tsarnaev's trial is scheduled to start in January. Out of those 1,000 jurors, 100 of them will be questioned by prosecutors and defense attorneys.

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When the economy gets a 20 percent discount

Marketplace - American Public Media - Mon, 2014-10-20 11:00

The impact of low oil prices is juicing American families’ pocketbooks in a way similar to a stimulus package, especially if crude stays low. Call it what you want: crude oil dividend, discount, energy quantitative easing.

Oil is 25 percent cheaper since the summer. And for drivers, the stimulus is instant.

“Every additional dollar or two you save at the pump you can use as disposable income right away,” says economist Ed Hirs of Hillhouse Resources and the University of Houston. “ Now you have more money for fast food. Or the six-pack of beer that you've been foregoing the past year or two.”

If oil prices stay low, and many bet it will, the savings will add up to a $200 billion domestic annual stimulus, estimates Citigroup. That’s about the size of the congressional stimulus in 2008. Citi figures the global economic boost is $1.1 trillion – again, annually.

Economist Stephen Brown at the University of Nevada-Las Vegas figures the typical American family saves $40 a month with today’s prices.

“Consumers in Washington D.C., New York and California, among a variety of areas in the United States will all see benefits,” Brown says.

But, he says, fortunes flip for energy producers. States like North Dakota, Wyoming and Oklahoma had benefited from high prices.

Similarly, global petro-states like Venezuela are also hurting from low prices.

“It limits the ability to be able to spend on the more expensive social programs you have within Venezuela,” says global oil analyst Jamie Webster of consultancy IHS-CERA. “It just puts additional pressure on the government there.”

When a economic driver gets a 20 percent discount

Marketplace - American Public Media - Mon, 2014-10-20 11:00

On the show Monday with Kai Ryssdal we're looking at the many potential consequences of the sustained drop in oil prices worldwide. Over the past few weeks we've examined this trend in oil prices and looked how it is effecting our domestic and global economies.

U.S. benchmark oil price dipped below $90 a barrel, earlier this month. As North America producing more than ever, some key suppliers are facing down a price war. Saudi Arabia, for example, was forced to sell at a discount rather than cut production.

But Saudi Arabia's price cuts could slow down the surging U.S. oil production. Domestic producers were in a bind, risking contributing to a downward spiral in pricing. Only "sweet spots" like North Dakota and Texas could still make money, while other operations won't be able to cover their costs. 

Oil demand growth fell to its lowest in five years last week. The International Energy Agency said demand was expected to grow by 700,000 barrels a day, 200,000 fewer than expected. Experts said that could be a sign of slow global economic recovery.

This week we'll look at the consequences in depth to try and answer the question: What happens when a major economic driver gets a 20 percent discount?

 

 

Volatility in context

Marketplace - American Public Media - Mon, 2014-10-20 11:00

So there has been all kinds of volatility on Wall Street lately — triple digit ups and downs.

Well, consider this:

27 years ago yesterday, October 19, 1987, was 'Black Monday.' The Dow was off 22 percent that day which came out to 508 points. The next day, known as 'Terrible Tuesday,' nearly caused the New York Stock Exchange to collapse. 

A similar drop today? 3607 points.

All this to say: context truly is everything.

Why IBM is paying $1.5 billion to lose a business

Marketplace - American Public Media - Mon, 2014-10-20 11:00

Monday was a dark day for IBM investors. The company's stock price fell by more than 7 percent after it released a disappointing quarterly earnings report.

But alongside that announcement came a more unconventional one: IBM is selling its chipmaking business to GlobalFoundries. But in this "sale," GlobalFoundries is collecting the check: $1.5 billion in cash over the next three years. 

"It’s the deal of a century," says Dan Hutcheson, who follows the industry for VSLI research.

The key is to look beyond the headline number. While IBM is paying GlobalFoundries in cash over the next three years, GlobalFoundries will supply chips for IBM servers for the following ten years--inputs that are key for IBM's legacy hardware.

"I know a billion and a half sounds like a lot, but it’s probably a deal for IBM, too," says Hutcheson.

"If you only look at the headline cash number, you are missing a lot of the story," says Rob Salomon, professor at the NYU Stern School of Business.

Acquisitions are complicated, and those complications can make payments to the acquirer economically sound. 

"As a matter of fact, there’s another example where this happened, which is Daimler-Chrysler’s spin-off of Chrysler. In effect, Daimler paid Cerberus to take Chrysler off its hands," Salomon says. 

In this case, there were tax benefits to be had, and the ire of the U.S. government to be avoided. Such deals are rare--Salomon doesn't believe there's been another this year--but aren't unheard of. 

"They’re almost always manufacturing-type businesses, right?" says Peter Cowen, adjunct professor at UCLA Anderson School of Management. "Ones that have heavy overhead, certain amount of infrastructure, certain amount of scale of things that need to unwind if they can’t find a buyer."

In other words, costly businesses — that would be even costlier to shut down.

CORRECTION: A previous version of this story misspelled Rob Salomon's name. The text has been corrected.

Eye Phone? Your Next Eye Exam Might Be Done With Your Phone

NPR News - Mon, 2014-10-20 10:46

Doctors need to look at the eyes to diagnose disease, but the machines they use are big and expensive. An iPhone or tablet may do as well, scientists say, bringing eye care to the underserved.

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The Artificial Boundary That Divides Iraq

NPR News - Mon, 2014-10-20 09:59

A checkpoint near Kirkuk marks the line between Kurdish-controlled territory and the world of Islamic State extremists. Some 5,000 civilians stream across daily, lives and families divided.

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Plane Of Good Samaritans: Why Fly To (And From) West Africa

NPR News - Mon, 2014-10-20 09:03

On the plane to Monrovia, our NPR correspondent saw the best of human nature in the passengers on board. Almost all of them were headed to Liberia to lend a helping hand.

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The numbers for October 20, 2014

Marketplace - American Public Media - Mon, 2014-10-20 09:01

Apple Pay launches today, and many are predicting the company - at an advantage with millions of existing iPhone users - could bring mobile payments into the mainstream. Many banks are aggressively advertising the service, the Verge reported, as part of a race to become the default card on users' lock screens.

Apple will report earnings after markets close today. In the meantime, here's what we're reading - and the numbers we're watching - Monday.

43 people

At the 21-day mark since Thomas Duncan was admitted to a Texas hospital and diagnosed with Ebola, 43 of the quarantined contacts have been released, among them Duncan's fiance and her son. Officials pleaded for compassion as their reintegrations began, the Washington Post reported. Additionally, Senegal and Nigeria were both cleared of Ebola over the weekend.

20 seconds

The length of Snapchat's very first ad, a commercial for a movie based on a board game. Snapchat, which is valued at $10 billion, hasn't made money yet, but that could change with the introduction of ads. Universal didn't actually use Snapchat's camera to make a "native" video, AdAge reported, but it did edit the trailer for "Oujia" to look like the app's "stories."

1

That's how many albums have gone platinum this year. Only the soundtrack to Disney's "Frozen," which has moved 3.2 million copies, has the distinction. Every other record has floated under 1 million in sales. By this time last year, Forbes reported, five albums had passed the 1 million mark.

10 percent

The approximate percentage of American Indian and Alaska Natives who have earned a bachelor's degree or higher, compared to about 30 percent of all U.S. adults. Natives have the lowest educational attainment rates of all ethnic and racial groups in America. The American Indian College Fund, founded 25 years ago, was created to assist the country’s more than 30 tribal colleges and universities. These are federally-funded schools located on or near native lands.

1 billion

The tech industry likes to talk about "The Next Billion." It's shorthand for the next billion people that will become online consumers and that makes them the target of tech giants like Google, Facebook and Samsung. This new, targeted market lives in emerging economies like China, India, Brazil and Africa, and have very different needs than the American smartphone user.

Nepal Ends Rescue Efforts After Deadly Avalanches In Himalayas

NPR News - Mon, 2014-10-20 08:40

Locals and international tourists are among at least 39 people known to have died in blizzards and avalanches throughout the foothills of Nepal's Himalayan mountain range last week.

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Indiana Officials Say Man Has Led Them To Multiple Bodies

NPR News - Mon, 2014-10-20 08:37

Suspect Darren Vann confessed to one murder, with which he has been charged, and subsequently led police to six other corpses in northwestern Indiana, authorities say.

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What scares you the most financially?

Marketplace - American Public Media - Mon, 2014-10-20 08:16

It's closing in on Halloween, so we're going to get financially spooky.

We want to hear your stories of the scary side of finance. Have you ever fallen victim to a scam? What was that like for you? What did you learn?

Tell us about it by email, or on Twitter, we're @MarketplaceWKND.

Quiz: Where school never stops

Marketplace - American Public Media - Mon, 2014-10-20 07:54

The number of year-round public schools is small, but growing fast, according to a report by the Congressional Research Service.

Which region of the United States has the most year-round schools?

Sweden's Sub Hunt Evokes Cold War Memories

NPR News - Mon, 2014-10-20 07:14

Stockholm has a grainy photo of what it says shows "foreign underwater activity" in an incident eerily similar to the grounding of a Soviet submarine in the same waters in 1981.

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IBM will no longer make its own chips

Marketplace - American Public Media - Mon, 2014-10-20 07:00

IBM just announced that it’s no longer making its own chips, a part of its business that it was losing money on. IBM is paying $1.5 billion to GlobalFoundries Inc. — a company based in Santa Clara, California but owned by an Abu Dhabi sovereign wealth fund — to take over its the division.

GlobalFoundries has a lot to gain by acquiring IBM’s chip division. The company will get access to IBM’s engineers and intellectual property.

“GlobalFoundries will also pick up some semiconductor process technology expertise that hopefully makes the company more competitive going forward,” says Needham analyst Quinn Bolton.

Fewer and fewer tech companies make their own chips. Apple, Dell, Qualcomm all rely on outside manufacturers. It makes sense economically because chip companies have the advantage of scale, says Gartner analyst Sergis Mushell. “If you are making ten of something vs a million of something from a price point perspective it’s more attractive when you make millions.”

The largest contract chip maker, Taiwan Semiconductor Manufacturing Company, quadrupled its capital spending in the last five years from $2.5 billion to $10 billion. If you are a company like IBM you have to look at those numbers and ask yourself, does it make sense to take a loss in chip making when you could just buy them from someone else?

IBM’s answer as of today is no, it doesn’t.

In The Big Easy, Food Vendors Create A Little Honduras

NPR News - Mon, 2014-10-20 06:53

Thanks to a quirk of history, New Orleans has long had a Honduran population, but it exploded post-Katrina. Nearly a decade later, Hondurans have created a vibrant, if underground, culinary community.

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Hong Kong Leader Blames 'External Forces' For Joining Protests

NPR News - Mon, 2014-10-20 05:21

Chief Executive Leung Chun-ying, who student activists have demanded step down, says "different countries in different parts of the world" are helping stoke unrest in the Chinese territory.

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Social media that doesn't compromise privacy

Marketplace - American Public Media - Mon, 2014-10-20 05:08

Four college students came together to create a social network that does not collect users' personal data. They wanted to build something better than Facebook or an alternative to Facebook. They did end up building that site, but it's by no means a rival to Facebook. That site is called Diaspora.

Author Jim Dwyer documents the start-up story in his latest book, "More Awesome Than Money." He says that Diaspora is supposed to be a decentralized social network focused on privacy, while giving users the sense of connection they crave.

"What they did that was important — and will continue to be worked on — is to look for ways to keep the web a democratic institution where people have authentic control over what they share and who they share it with," Dwyer says.

Diaspora's goals:

  • Not compromise people's privacy: What drove the project from the beginning was the idea that you didn't really need to compromise your privacy to have a good social experience on the web.
  • Keep it decentralized: The entire project of the web as invented was not intended to be in the hands of giant corporations. It was sort of a democratic, decentralized setup.
  • Put control into the user's  hands: You can take your data off of Diaspora. Facebook now says you can take your data off of their servers although that takes a while and they don't really want you to do that.

Why it didn't succeed, as planned:

  • It lacked organic networks: Users' real life friends weren't using it, that causes people to lose interest in using it.

Some consultants see a payday in super PACs

Marketplace - American Public Media - Mon, 2014-10-20 04:24

A super PAC is sometimes born out of a strong sense of mission – maybe its founder cares about gun control or education reform. But other times, says Stefan Passantino, a partner at McKenna Long & Aldridge, “part of that mission is to create a client for their own consulting firm.”

Political consultants can create super PACs or political nonprofits to raise money, Passantino says, and then they can use that money to pay themselves.

“Yeah, I would say it is the new growth industry,” says Trevor Potter, former chair of the Federal Election Commission and general counsel to John McCain’s two presidential campaigns. “If you are a consultant who is part of the control group that forms a super PAC or one of these nonprofits, then you get to figure out how you are going to compensate yourself, and it is not always a matter of public record.”

Inside a ‘black box’

There are a few ways this can work. A super PAC can pay a fee to a consulting firm that is run by the same consultant who started the super PAC. That firm could charge fees on ads the super PAC buys. According to Potter, this happens in what he calls “a black box.”

“It’s actually pretty hard to figure out how much administrative costs many of these groups have, and then, how much of that is ending up back in the consultant’s pocket,” he notes.

A super PAC’s founder can be an employee of his own super PAC. “Under election laws, there is nothing improper about taking a salary out of your own super PAC,” says Ken Gross, who spent most of his career as an FEC attorney. That money is taxable, however. He notes there is also nothing improper under election laws about taking money you have raised and spending it on personal items.

“Right now, there are 109 super PACs in our data that reported spending money but have made no independent expenditures,” says Sheila Krumholz, who tracks political spending at the Center for Responsive Politics. All they are doing, Krumholz explains, is paying staff and consultants to help them raise more money. “They are capitalizing on political interests in order to siphon off money that would otherwise go to support candidates and parties, and instead, they are using it for their own personal enrichment.”

Krumholz worries that is weakening civic engagement and making the electorate even more cynical.

Easy to set up

Super PACs have only been around since 2010, and according to Potter, one reason they have proliferated is they are so easy to set up. “It has an incredibly simple one-page form you file with the FEC,” he says.  “You need a treasurer and a bank account, and that’s it. You’re off and running.” And creating a political nonprofit that doesn’t have to disclose donors is not much harder.

There are, according to the FEC, about 900 active independent expenditure-only committees, commonly called super PACs, and on top of that, there are hundreds of political nonprofits that have registered with the Internal Revenue Service as 501(c)4s and 501(c)6s.

Potter says that, because there are so many super PACs and nonprofits, political consultants are busier than ever. “The good ones used to just have a campaign or a party they could work for,” he points out. “Now they have all these super PACs; so, people end up bidding for their services.”

Of course, every cycle, some super PACs whither on the vine. Richard Briffault, an election law expert at Columbia Law School, says this highlights something eve the savviest consultant should keep in mind: “At some point, they do have to get donations.”

You can start your own group, hoping it will become a steady source of income, but you have to make sure there is money in the coffers.

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